Court of Appeal Supreme Court New South Wales Medium Neutral Citation: Boorer v HLB Mann Judd (NSW) Pty Ltd [2014] NSWCA 100 Hearing dates: 25/03/2014 Decision date: 03 April 2014 Before: Macfarlan JA at [1]; Leeming JA at [2]; Sackville AJA at [74] Decision: Appeal dismissed, with costs. [Note: The Uniform Civil Procedure Rules 2005 provide (Rule 36.11) that unless the Court otherwise orders, a judgment or order is taken to be entered when it is recorded in the Court's computerised court record system. Setting aside and variation of judgments or orders is dealt with by Rules 36.15, 36.16, 36.17 and 36.18. Parties should in particular note the time limit of fourteen days in Rule 36.16.] Catchwords: TORT - professional negligence - claim by director against public company's accountant - documents lodged with ASIC by accountant incorrectly showing directors and secretary appointed although they had not consented - accountant knew officers had not given written consents - ASIC subsequently disqualified director from managing corporations based in part on incorrect forms lodged by accountant - AAT imposed shorter period of disqualification for other deficiencies, separate from incorrect forms being lodged - primary judge found director instructed accountant to lodge forms without first obtaining written consents - primary judge found no breach of duty and no loss - Fox v Percy challenges to findings of primary judge - appeal dismissed because no loss - challenges to factual findings not made out PRACTICE - amendment - leave sought at hearing to amend notice of appeal - leave refused because of prejudice and unexplained delay Legislation Cited: Australian Securities and Investments Commission Act 2001 (Cth), s 51 Civil Procedure Act 2005 (NSW), ss 56-58 Corporations Act 2001 (Cth), s 201D, s 201A, s 204A, s 204C, s 205B, s 206F, s 327A, s 533, s 1308, s 1311 Uniform Civil Procedure Rules 2005 (NSW), r 51.53 Cases Cited: Boorer v Australian Securities and Investments Commission [2010] AATA 390 Fox v Percy [2003] HCA 22; 214 CLR 118 Kuru v New South Wales [2008] HCA 26; 236 CLR 1 Levy v Bablis [2012] NSWCA 128 Riley v The Owners - Strata Plan 73817 [2012] NSWCA 410 Warth v Lafsky [2014] NSWCA 94 Xu v Jinhong Design and Constructions Pty Ltd [2011] NSWCA 277 Category: Principal judgment Parties: Graeme Boorer (appellant) HLB Mann Judd (NSW) Pty Ltd (respondent) Representation: Counsel: B Toomey QC with TJ Morahan (appellant) PA Horvath (respondent) Solicitors: Chen Shan Lawyers (appellant) Norton Rose Australia (respondent) File Number(s): 2012/396232 Decision under appeal Jurisdiction: 9111 Citation: [2012] NSWSC 1499 Date of Decision: 2012-12-06 00:00:00 Before: Adamson J File Number(s): 2009/20468 Judgment 1MACFARLAN JA: I agree with Leeming JA that, for the reasons he gives, the Court should make the orders that he proposes. 2LEEMING JA: The primary judge dismissed Mr Boorer's claim after a four day trial in the last week of November 2012. Her Honour's reasons, promptly delivered on 6 December 2012, occupy 166 paragraphs over 44 pages. Her Honour resolved the central factual controversy, of how and why false information came to be lodged with ASIC by the respondent (HLB), unfavourably to Mr Boorer, based in part upon her unfavourable assessment of him during cross-examination. 3Putting to one side a claim for misleading and deceptive conduct (which was not agitated on appeal), her Honour found there was no breach of a duty of care at common law in respect of two strands of Mr Boorer's case. Speaking generally, Mr Boorer alleged that HLB was under a duty of care requiring it (a) to lodge returns with ASIC properly and (b) to monitor the solvency of his company. Her Honour also found that if there had been a breach of duty in either respect, the breach caused no loss. 4Mr Boorer appeals as of right to this Court, and at the forefront of his appeal is a Fox v Percy [2003] HCA 22; 214 CLR 118 challenge to her Honour's determination of the critical contested issues of fact. Before turning to the "real review of the trial" that that entails, it is convenient to outline the factual background and identify the areas in dispute. Overview of factual background 5Mr Boorer caused to be incorporated an unlisted public company, Techontap International Ltd, in 2003. His evidence at trial was that he knew that, as a public company, Techontap was subject to "far higher standards of corporate governance", including an annual audit and having at least three directors, than a proprietary company. He consciously chose a public company structure because he intended "to raise significant external capital from sophisticated investors and institutions". He also said that he hoped at some stage to float Techontap on the Australian Stock Exchange. 6A company which appoints a person to act as a director must first obtain that person's signed consent. The company must keep the consent. A public company must have at least one secretary (although a proprietary company need not). A company which appoints a secretary must first obtain that person's signed consent, and, once again, the company must keep it. A company must lodge with ASIC a notice in the prescribed form (Form 484) within 28 days of appointing a director or secretary. A person must not lodge a document with ASIC which is, to the person's knowledge, false in a material respect. Those obligations are contained in ss 201D(1), 201D(2), 204A(1), 204C(1), 204C(2), 205B(1) and 1308(2) of the Corporations Act 2001 (Cth). Contravention of any is an offence: ss 1311(1) and 1308(2). 7These are basic aspects of corporate regulation in this country. 8Irrespective of how the controversial facts underlying this litigation are resolved, there have been sustained contraventions of each of those provisions. Taking the most charitable view, neither Mr Boorer, nor Ms Mariana Von Lucken, who was at relevant times an employee of HLB, was aware of those offences. It should be added that it was no part of either party's case that there had been deliberate wrongdoing; indeed, when the primary judge raised the seriousness of intentionally misleading ASIC, counsel for Mr Boorer said "We don't have to go that far. I pulled out before I got to that stage." 9Techontap retained HLB to provide a variety of accounting, taxation, auditing and company secretariat services, including preparing and lodging forms with ASIC from time to time. It was common ground at the trial and on appeal that HLB owed Mr Boorer (personally) a duty of care in relation to the forms lodged with ASIC, although the content of that duty of care was in issue. In its amended defence, HLB alleged that its duty was discharged when it prepared and lodged forms with ASIC in accordance with Mr Boorer's instructions. Mr Boorer contended for a broader duty of care. There was competing expert evidence, not fully resolved by the primary judge, as to the content of the duty of care. 10It was uncontroversial that HLB arranged for Techontap to use its premises as that company's registered office in Sydney, that HLB was Techontap's tax agent and prepared tax returns and, importantly for this appeal, was Techontap's registered agent with ASIC, prepared and lodged ASIC forms, maintained company registers, and prepared minutes of meetings of Techontap's board. HLB was also appointed as Techontap's auditor in December 2003 (s 327A of the Corporations Act required a public company to appoint an auditor within one month of its registration as a company); however it was common ground that no statutory audit was ever undertaken. 11On 10 May 2004, Mr Boorer advised Ms Von Lucken that one of the three directors of Techontap, and its secretary, had that day offered his resignation. Following the resignation, the remaining directors of Techontap were Mr Boorer and his son. (a) The purported appointments of Messrs Leonard and Brett King 12Mr Boorer then invited Mr Leonard King and his son Brett to become directors, with Mr Leonard King as secretary. Mr Leonard King lived in Melbourne, and Mr Brett King in Hong Kong. The primary judge found that both Messrs Leonard and Brett King were willing to become directors of Techontap, so long as sufficient capital had first been raised. The primary judge found that, shortly before 22 July 2004, Mr Boorer telephoned Ms Von Lucken and asked her to prepare directors' consents for Messrs Walter Adamson and Leonard and Brett King. Emails from each of those three men, stating their dates and places of birth and addresses, were forwarded to Ms Von Lucken. For example, on 22 or 23 July 2004, Mr Boorer wrote to Ms Von Lucken, copied to Mr Leonard King: "Mariana, Leonard King has consented to be director/secretary techontap International Limited - can you please provide consent form to him and register accordingly. You will note his company, Kingston Group, has shares that also need issuing as per spreadsheet. Nearly there! Graeme" 13Ms Von Lucken caused to be prepared minutes of a directors' meeting of Techontap held on 26 July 2004 at 10am dealing with the allotment of shares and the appointment of three directors and a secretary. Each appointment was in the same terms; for example, in the case of Mr Leonard King, the minutes provided: "• IT WAS RESOLVED that Leonard Keith King, who has consented to the appointment, be appointed Director to take effect from today." 14The document prepared by Ms Von Lucken was signed by Mr Boorer. He did so in a meeting with Ms Von Lucken on 28 July 2004. At the same meeting, Mr Boorer signed a Form 484 notifying ASIC of the appointment of Mr Adamson and Messrs Leonard and Brett King as directors and of Mr Leonard King as secretary. 15There is no suggestion in the evidence that Mr Boorer knew that it was an offence for a company to appoint a director or secretary without first obtaining that person's consent in writing. There is no suggestion in the evidence that Ms Von Lucken knew that it was an offence for Techontap to have appointed those men without first obtaining their written consent, or that she ever advised Mr Boorer of the obligations and offences created by ss 201D and 204C. Indeed, there is but scant suggestion in the evidence that there was an actual meeting, or even a telephone meeting, between the remaining two directors of Techontap, Mr Boorer and his son, at 10am on 26 July 2004. Mr Boorer's first affidavit stated that he "totally relied upon Ms Von Lucken", and did not read the bundle of about 80 pages held together with a bulldog clip provided by her, but instead merely signed where he had been asked to sign. Although Ms Von Lucken swore that she recalled being told by Mr Boorer that he intended to have a directors' meeting on 26 July 2004, Mr Boorer denied that any such conversation occurred. 16The primary judge found that on 28 July 2004, although Ms Von Lucken had the signed minute of the directors' meeting of 26 July 2004, and the signed Form 484, she knew that none of the three men had signed consents. At some time in the next fortnight before lodging the Form 484, Ms Von Lucken received a consent form signed by Mr Adamson. Despite repeated requests by Ms Von Lucken, consents from Messrs Leonard and Brett King were not forthcoming. 17There was a dispute at trial, which is central to this appeal, as to the terms of the conversations between Mr Boorer and Ms Von Lucken over this period. The primary judge found (and this finding is strongly challenged on appeal) that Mr Boorer instructed her to lodge the form with ASIC in these terms: "I promise to chase them up, but please lodge the forms with ASIC now so that I am not in breach of the Act." 18There is no dispute that the Form 484 was lodged on 12 August 2004, and that thereafter ASIC's records were amended so as to reflect that Messrs Leonard and Brett King were directors of Techontap and Mr Leonard King its secretary. On the same day Ms Von Lucken's assistant sent a handwritten note to Mr Leonard King in these terms: "Dear Mr King, Enclosed are letters of consent to appoint yourself as Director & Secretary of Techontap International Limited. Also enclosed is a letter from the Kingstone Group Pty Limited applying for the allotment of 625 founders shares. Would you please sign these documents and return them to this office. It would be greatly appreciated if you would arrange for Brett to sign the documents where appropriate. Should you have any queries, please contact me on (02) 9020 XXXX. Mariana Von-Lucken." (b) The realisation that Messrs Leonard and Brett King were not validly appointed 19Some months later, on 29 March 2005, Mr Adamson resigned, purportedly with effect from 15 March 2005. On 30 March 2005, Mr Boorer asked Ms Von Lucken to effect Mr Adamson's resignation as at 15 March. 20After March 2005, Techontap only had two directors, instead of the three which Mr Boorer and Ms Von Lucken well knew were required, unless (as was recorded in ASIC's register) Messrs Leonard and Brett King had been appointed directors. After May 2004, Techontap had no company secretary, as required by s 204A, unless (as was recorded in ASIC's register) Mr Leonard King had been appointed secretary. During the trial, it was common ground that Messrs Leonard and Brett King never consented to be appointed, and were not in fact appointed, as directors or (in the case of Mr Leonard King) secretary. What was disputed was when each of Mr Boorer and Ms Von Lucken appreciated that fact. 21A related issue at trial, which was also prominent in the appeal, was as to the time when Mr Boorer learned that no signed consent forms had been received by HLB. The primary judge found that Mr Boorer knew this on 30 September 2004, and was critical of that and other aspects of his evidence (it will be necessary to return to this below). However, it was uncontroversial that Mr Boorer knew the true position by the end of May 2005. 22On 28 May 2005 Mr Boorer sent an email to Mr Brett King which included the following: "...however recently I saw a ASIC company print out and saw you listed as a director of Techontap International Limited - did you sign Consent to Act as Director forms? If so I sincerely apologise for not keeping you across matters. If you did, then Ruben Simon Boorer (my eldest son) you and I are the three directors. (Walter resigned two months ago) Sam Seabury, whom Dad introduced, will not accept appointment until funding is in place, however he is proving a solid CEO and has the discipline, determination and loyalty to manage high growth that I believe will come once the business plan is funded. That said Techontap is dangerously close to being insolvent and so Sam and my efforts are focussed on raising a Stage One Convertible Note for $AUD250,000 and $AUD1.25 Stage Two for 20% equity. Stage One is needed asap and while we have $500K from R&D Grants due by 22 July, we are running close to the wind." 23On 30 May 2005 there was an exchange of emails between Mr Boorer and Mr Brett King. Mr Brett King said that he had "confirmed with Dad that neither he nor I consented to directorship for [Techontap]." Mr Boorer responded: "That is a relief! Will action to ensure ASIC reflects that - and how come your name appears. Mann Judd may have mistakenly submitted forms, certainly without my approval." 24The primary judge found that notwithstanding this exchange of emails, the plaintiff took no action to rectify the ASIC records. Her Honour rejected Mr Boorer's evidence that he promptly forgot about his promise to rectify ASIC's records. 25Techontap's balance sheet as at June 2005 (the version in evidence had been provided to Mr Boorer on 1 September 2005) showed a precarious financial position. Its current liabilities exceeded $322,000. Although its current assets were some $405,000, $396,000 reflected a "R&D Claim Receivable". On 2 September 2005, HLB had lodged a tax return claiming an R&D tax offset of $385,420.80. Around 22 September, HLB received that refund and remitted $339,000 to Mr Boorer (HLB retained some $46,000, reflecting $36,000 of work performed and $10,000 for future work). The following Monday 26 September 2005, Mr Boorer caused an administrator to be appointed to Techontap. 26Also in September 2005, Mr Leonard King wrote to ASIC saying that neither he nor his son Brett had consented to being appointed as officers of Techontap. Mr Boorer forwarded Mr Leonard King's email to Ms Von Lucken under this email: "Mariana, Len King is quite upset over the matter below - and rightly so. He has never signed Consent to act as Director - neither has his son Brett. Can you please advise urgently how this matter can be corrected? Best regards, Graeme." 27There was a further dispute at trial, and on appeal, as to the conversations between Mr Boorer, Mr Leonard King and Ms Von Lucken in September and early October 2005; principally this was relevant as bearing upon the primary judge's finding that Mr Boorer, on 12 August 2004, had instructed Ms Von Lucken to lodge the Form 484. Mr Leonard King said that Ms Von Lucken had acknowledged that she had made an error, for which she would take full responsibility, when the Form 484 was lodged. He gave evidence and was cross-examined about his recollection. The primary judge found at [55]: "I do not accept Mr King's evidence about this conversation. I am satisfied that Ms Von-Lucken told him that she would investigate the documentation and also that she was prepared to inform ASIC that there had been an error. However, I am not satisfied that she admitted that it was her mistake or that she was responsible for it. As I have found above, Ms Von Lucken did what the plaintiff had instructed her to do. She had no reason to admit that she had made a mistake and I am satisfied that no such admission was made." (c) Winding up of Techontap and disqualification of Mr Boorer 28Techontap was wound up on 14 December 2005. That, together with his having been a director of two other companies to which a liquidator was appointed in March and October 2004 (and whose unsecured creditors were expected by the liquidators to receive 0 cents in the dollar: see s 533(1)(c)) engaged ASIC's power under s 206F to disqualify Mr Boorer. ASIC conducted a hearing under s 51 of the Australian Securities and Investments Commission Act 2001 (Cth) on 27 May 2008 on the question whether he should be disqualified. Following that hearing, on 27 June 2008, ASIC issued a notice of disqualification, preventing him from managing corporations without the leave of ASIC for two years. The disqualification was published on the ASIC website and received some publicity. The disqualification was, in part, based upon a finding that Mr Boorer had misled ASIC by signing the Form 484 and providing it to HLB. ASIC's delegate said: "...in view of Mr Boorer's experience as a director of 10 companies, I do not find it credible that he signed dated forms appointing Brett King and Leonard King as directors without understanding what he was doing, particularly as the relevant form has large headings indicating that the purpose of the form is to appoint a company officeholder. Mr Boorer has not provided evidence to support his assertion that HLB Mann Judd lodged the documents contrary to Mr Boorer's instructions. He must have returned the duly signed forms to HLB Mann Judd in order for them to have lodged the forms with ASIC. In the absence of documentary evidence to the contrary, the conclusion I draw is that the forms were lodged on Mr Boorer's instructions." 29However, there were other matters on which the delegate relied. The liquidators' reports complained of the absence of proper books and records. Three companies failed, and creditors were unpaid. The delegate observed that in the absence of good record keeping, Mr Boorer could not know the financial position of his companies. 30Mr Boorer sought review from the Administrative Appeals Tribunal, constituted by the Hon B Tamberlin QC, Deputy President. On 26 May 2010, the AAT set aside ASIC's decision and replaced it with a decision that Mr Boorer be disqualified from managing corporations for a period of one year, operative from 27 June 2008: Boorer v Australian Securities and Investments Commission [2010] AATA 390. It seems that no stay of ASIC's disqualification was sought, and so, for practical purposes, Mr Boorer was unable to manage corporations from 27 June 2008 until 26 May 2010. In concluding that a lesser period of disqualification was the correct or preferable decision, the Tribunal accepted evidence from Mr Boorer and Mr Leonard King (the latter does not appear to have provided evidence to ASIC's delegate) that there had been an error on the part of HLB in the lodgement of the Form 484. The reasons record that: "38. Mr King states that an employee of HLB Mann Judd admitted that she had not received consent forms signed by Brett or Leonard King and that lodgement with ASIC showing them as directors was an error on their part. Having regard to the evidence of Mr King, I am satisfied that the misleading statement was made, but that it was explicable by a fact that arose from an error on the part of the accountants and miscommunications which were not intentional. I find that no adverse conclusion can be drawn as to the conduct of Mr Boorer in relation to this matter. I accept that it was an honest mistake. ... 46. I do not accept that he has engaged in blameworthy, false or misleading conducting in relation to the lodgement of documents nominating Mr Leonard King and Mr Brett King as directors. Incorrect statements were made but they were consequence of an honest mistake." Nevertheless, the Tribunal was satisfied that there were significant breaches by Mr Boorer in failing to keep and conserve adequate financial records and in allowing Techontap to trade while it was insolvent. The claim against HLB based on insolvent trading 31At trial, Mr Boorer advanced a claim of breach of duty by HLB, in failing to warn him that he was, or might have been, trading while insolvent. Her Honour addressed the case as it had been advanced in particulars extending outside the scope of the pleading (although no amendment had been sought) and concluded that the plaintiff had failed to establish any breach of duty, and had also failed to establish that there would have been any difference had advice been given that Techontap was, or might be, trading while insolvent: at [114]-[134]. 32None of the ten grounds of appeal challenged the finding of failure to establish breach of any duty in relation to insolvent trading. Although two paragraphs (paragraphs 53 and 54) of Mr Boorer's written submissions on the appeal pointed to error in relation to that finding, the respondent's written submissions filed 20 December 2013 correctly stated that breach of duty in relation to insolvent trading was "not a matter raised in any of the grounds of appeal", and, even if it were, there was no challenge to the finding of no causation. The written submissions also indicated that HLB's retainer was limited and did not give it access to current financial information pertaining to Techontap's solvency, such that HLB did not have an opportunity, let alone a responsibility, to assess Techontap's solvency. Both of those matters were findings made by the primary judge, and neither was challenged in the notice of appeal. 33The appeal was listed for hearing on 25 March 2014. On the day before the appeal was listed to be heard, a proposed amended notice of appeal was provided to the respondent and leave was granted to rely upon it at the commencement of the appeal. The amended notice of appeal did not challenge the findings of no breach and no causation in relation to insolvent trading. 34After the luncheon adjournment, a further application to amend, so as to challenge the findings in relation to insolvent trading, was made. Leave was refused, on the basis that reasons would be given when judgment on the appeal was delivered. 35I joined in that order (a) because counsel for the respondent claimed that she was prejudiced by the belated raising of these additional grounds, (b) because, on its face, that claim was plausible, the grounds requiring a review of a deal of evidence and submissions otherwise not mentioned in the parties' written and oral submissions on the appeal, and (c) because no explanation was provided for the lateness of the application, in circumstances where the appellant had been squarely on notice for nearly three months and had supplied a proposed amended notice of appeal not extending to these grounds on the previous day. The obligations in ss 56-58 of the Civil Procedure Act 2005 (NSW) all point squarely against the grant of leave; the amendment, if allowed, would unquestionably have led to further written submissions, if not the need for additional oral submissions. The only available inference is that there had been a deliberate forensic choice in the months preceding the hearing of the appeal not to expand its scope. There comes a time in litigation when it is too late to renounce deliberate forensic choices cf Levy v Bablis [2012] NSWCA 128 at [70]; Warth v Lafsky [2014] NSWCA 94 at [71]-[80]. That time was well and truly reached by 2.15pm on the afternoon of the hearing of the appeal. Findings on causation and loss connected with the Form 484 36Putting to one side the insolvent trading claim, her Honour made findings on causation and damages regarding the lodgement of the Form 484 at [153]-[157]. It is convenient to reproduce them in full, for two reasons. The first is that only if they are successfully set aside is there an occasion for this Court ordering a retrial. Counsel for Mr Boorer candidly and properly conceded that this was a case where, if appellable error were established, this Court could not determine the outcome. There would need to be a retrial. But this Court must not order a new trial unless it appears that "some substantial wrong or miscarriage" has occurred: Uniform Civil Procedure Rules 2005 (NSW) (UCPR), r 51.53(1). 37The second is that there are cases where a successful challenge to factual findings undermining a conclusion of no breach might of themselves undermine findings of causation and loss, because those latter findings are infected by the earlier erroneous approach. Although this was not squarely put on behalf of Mr Boorer, it was arguably implicit in the submissions advanced. 38Her Honour found (at [149]-[150]) that CCI's unwillingness to re-engage Mr Boorer after his contract expired had nothing to do with the disqualification. Her Honour continued as follows: "153 Had the defendant refused to lodge the Form 484 until the written consents had been received, then the plaintiff would still have been disqualified under s 206F from managing a corporation for a year, since this was what the AAT decided was the appropriate length of disqualification: Boorer and Australian Securities and Investments Commission [2010] AATA 390. 154 The plaintiff submitted that his loss of income ought be assessed by reference to figures in the order paid by CCI to CSI referred to above. I accept the defendant's submission that this contract was, in the plaintiff's career, an outlier. There is no evidence to establish that this contract with CCI was other than an extraordinarily lucrative period in an otherwise relatively unremunerative working life. Furthermore, for reasons given above, I am not satisfied that the cause of cessation of the CCI work had anything to do with the Disqualification. 155 The next question that arises is whether the opprobrium of being disqualified for managing companies that did not have sufficient capital to meet their obligations and failing to keep adequate books and records is significantly less than the opprobrium of those matters together with the opprobrium of authorising a document to be lodged with ASIC which showed persons as directors when they had not consented in breach of s 1308 of the Corporations Act. The plaintiff submitted that the additional ground carried a significant additional stigma since it impugned the plaintiff's reputation for honesty and integrity, in a way that record-keeping and under-capitalisation did not. 156 I accept that the effect on the plaintiff's reputation for honesty and integrity of a finding of misleading and deceptive conduct would be substantial and that, conceivably, it would affect his capacity to earn in roles for which honesty and integrity were prerequisites. It does not, however, seem to me that the role that the plaintiff, through CSI, performed for CCI required such qualities, or that the role the plaintiff performed through CS previously, required such qualities. His role in both instances was essentially technical and involved him in assisting clients to set up systems and databases and use them effectively. 157 In any event, for the reasons given above, there is no basis for concluding that but for the Disqualification, CCI would have offered him more work. ... 162 The plaintiff has adduced no reliable evidence that any diminution of earning capacity that he has suffered as a result of the defendant's (assumed) negligence, has or will be productive of economic loss. 163 While the plaintiff was disqualified, he could not be a director, or manage a company. There is no evidence of his being a director of a company other than one of which he was a major shareholder. He did not put his case on the basis that he ought be awarded a buffer for the loss of opportunity to be a director of companies of which he was not a shareholder. In all the circumstances, I do not consider that I should award a buffer. 164 Nor am I satisfied that work such as the work that the plaintiff was performing through CS, and later CSI, would not have been as available to him after the Disqualification as it was prior to the Disqualification. 165 For these reasons, even had I been satisfied that the plaintiff was entitled to success on damages, I would not have awarded him more than nominal damages." 39The "CCI work" referred to was consultancy work performed by Mr Boorer for the Western Australian Chamber of Commerce & Industry pursuant to a consultancy agreement which expired in August 2008. Grounds 8-10 of the amended notice of appeal 40Grounds 8, 9 and 10 deal with damages. They are in these terms: (8)Her Honour erred in failing to infer that disqualification by ASIC would affect the appellant's standing in the market place. (9)Her Honour erred in not applying or not correctly applying the principles enunciated by the High Court in Husher v Husher (1999) 197 CLR 138 in regard to the loss of earning capacity of the appellant. (10)Her Honour erred in finding that the appellant's income received from the Western Australian Chamber of Commerce and Industry was not representative of the appellant's earning capacity and in finding that the engagement with that entity was "an extraordinarily lucrative period in an otherwise relatively unremunerative working life". 41Ground 8 is not made out. Her Honour did, expressly, accept that the plaintiff's reputation would be affected by ASIC's order and that "conceivably, it would affect his capacity to earn in roles in which honesty and integrity were prerequisites": at [156]. 42More importantly, even if ground 8 were made out, it does not undermine the ultimate finding that there was no loss. It was established conclusively by the decision of the AAT that Mr Boorer should be disqualified from managing the affairs of corporations, albeit for a period of one year, for matters expressly unrelated to anything to do with the lodgement of the Form 484. True it is that if Mr Boorer's income were dependent upon his being able to be a company director, the additional year's disqualification would matter. But there was no evidence that he was denied income by reason of his being disqualified for an additional year. It was not part of Mr Boorer's case that he lost any income from being unable to act as a director between 26 June 2009 (the date of expiry of the one year disqualification) and 26 May 2010 (when the AAT set aside the two year disqualification and substituted a period of one year. 43Similarly, there was no evidence before her Honour of any differential impact upon Mr Boorer's reputation between a one year period of disqualification and a two year period of disqualification. Nor is that in any way surprising. Mr Boorer tendered an email from a prospective business partner who said: "Graeme part of my job is to make sure that who I partner with is ethically sound so to do this I obviously carry out research as much as possible [sic]. I'm not sure that this is you but there seems to be an issue with a G.J.Boorer with ASIC, would you like to expand on this comment. I'm really sorry to have had to raise this." 44It is obvious that it was the fact of the disqualification, rather than its length or the reasons for it, which was critical to Mr Boorer's reputation. Even if the reasons for it were made available, it is easy to see that a prospective commercial partner would be much more concerned by his consistent history of holding office in companies that fail, and trade while insolvent, and fail to keep records, as opposed to the lodging of an erroneous Form 484. 45Ground 9 was not the subject of any written submissions, as was pointed out in the respondent's written submissions. Ground 9 was not addressed orally either. It is to be taken as abandoned. 46Ground 10 was not advanced in writing or orally. Even if it were made out, it did not matter. Her Honour's finding was that the CCI contract came to an end, and Mr Boorer's subsequent employment and income was unaffected by the disqualification. No basis was advanced to challenge her Honour's finding that the work performed by the plaintiff for CCI, and subsequently, was not affected by the disqualification. 47Accordingly, the limited challenge to the findings of no loss fails. Moreover, the findings are unaffected by the outcome of the balance of appeal, challenging the findings of breach. They are independent of the unfavourable credit findings made by her Honour, and the fact-finding process used in relation to breach. 48Test the matter this way. Suppose, in accordance with Mr Boorer's case on appeal, and contrary to the credit-based factual findings of the primary judge, Ms Von Lucken was in breach of her obligations to him when she lodged the Form 484, and suppose as he and his witness said, she accepted that it was her fault. The fact of the matter is that Techontap failed, no differently from other companies managed by Mr Boorer, he was disqualified by ASIC and the AAT determined that the disqualification, for matters unrelated to the false Form 484, was appropriate. Even if factual findings were made wholly in his favour on questions going to breach of duty, Mr Boorer would nevertheless fail to establish his tortious cause of action unless somehow he could demonstrate that there was loss of income or reputation by reason of the reliance by ASIC's delegate on the lodgement of the false Form 484. But there was no viable challenge to her Honour's findings on loss, and those findings are both inherently plausible and independent of any errors in the fact-finding process relevant to breach of duty. 49Had this been a case where there remained on the record a disqualification order based upon a finding that Mr Boorer had misled ASIC when the Form 484 was lodged, then, conceivably, it might have been appropriate to remit the matter for retrial if Fox v Percy error had otherwise been made out. At least in principle, there can be a "substantial wrong or miscarriage" within the meaning of UCPR r 51.53 even if no pecuniary consequences flow from it. But that is not this case. The only order damaging Mr Boorer's reputation that is extant is an order which expressly (and contrary to the findings of the primary judge) exonerates Mr Boorer from culpable conduct in relation to the lodgement of the Form 484. The balance of the appeal 50On this basis alone, the appeal must be dismissed. Nevertheless, because of the importance of the issues to both parties, in deference to the submissions received by this Court, and in compliance with Kuru v New South Wales [2008] HCA 26; 236 CLR 1 at [12], I turn to the balance of the appeal. 51The obligation as stated in Kuru is not to deal with all grounds of appeal, even those which are unnecessary to the outcome, but to consider whether to deal with them. It is possible to deal in detail with most of the specific challenges to findings of fact advanced on appeal, and to do so relatively concisely, and I do so below. There are large questions as to breach, which were not argued before this Court at all, nor fully determined by her Honour. Although they cannot alter the outcome of this appeal, the impact of their resolution by this Court on other litigation is unknown. All those considerations point to a more restrained approach on some of the more general questions that arise. 52Rather than dealing with the grounds in the order in which they appear, it is more convenient to deal with the issues the subject of challenge on appeal. (a) Did the primary judge err in finding that Mr Boorer instructed Ms Von Lucken to lodge the Form 484? (grounds 1 and 3) 53Mr Boorer denied that he instructed Ms Von Lucken to submit the Form 484. In his submissions on the appeal, it was put that it was inherently unlikely that he would have done so. It was said that "all that needed to be done was for Ms Von Lucken to remove the two pages in relation to the Kings and send the form to ASIC with only Mr Adamson's page". It was said that it took many years before Ms Von Lucken first stated that she had lodged the forms because she had been so instructed. One obvious time for her to have done so was in September 2005, when complaint was made to ASIC about the errors in the forms and there was a meeting about it. Although there was a dispute as to whether at that time she had told Mr Leonard King that it was entirely her fault, there was no suggestion that she said at that time that she only lodged the form because she was instructed to do so. 54Mr Boorer's submissions complain that: "On 12 August 2004 Ms Von Lucken knew that she had a method available to her to fulfil her duty to Techontap, by removing the pages relevant to the Kings and lodging the Form 484 in relation to Mr Adamson only. She was in breach of her duty by lodging the offending forms. The trial judge appears never to have realised that the breach was not in putting in the Adamson form, but in failing to remove the King forms before lodgement; had that been done there would have been no breach." 55The authors of those submissions focus upon just one breach: the continuing obligation of a public company to have three directors: s 201A(2). No regard is paid to the totality of the unlawful conduct, which could not be cured by lodging pages 1, 2 and 5 of the Form 484. There would still be an ongoing breach of s 204A(2): public companies must have a secretary. Further, it is far from clear that lodging part of a form which had been signed by Mr Boorer, which reflected only one of the four appointments (three as directors, one as secretary) which were purportedly the subject of Techontap's resolution on 26 July 2004, would not contravene s 1308(2). 56The short point is that contrary to Mr Boorer's written and oral submissions, there was no easy step for Ms Von Lucken to take on 12 August 2004 which would prevent breaches of the Corporations Act. 57However, taking an approach which reflects the parties' seeming ignorance of many of their legal obligations, let it be assumed that Mr Boorer and Ms Von Lucken knew only that ASIC must not be misled and that Techontap required three directors. It does not follow that it was "glaringly improbable" for Mr Boorer to have instructed Ms Von Lucken to have lodged the form. 58The fact that on the same day that the form was lodged, a handwritten note was sent to Mr Leonard King requesting his consent, in circumstances where there had been repeated requests for his signed consent, makes it not implausible that the only reason that Ms Von Lucken lodged the form was that she was asked or instructed by Mr Boorer to do so. Far from amounting to a glaring improbability that would entitle an appellate court to set aside the factual finding of the trial judge, it is hard to think why Ms Von Lucken would lodge a document, knowing that signed consents were required, and knowing of her obligation not to mislead ASIC, unless Mr Boorer was placing pressure upon her to do so. It seems very unlikely that it was a miscommunication or administrative error. But the short point is that Mr Boorer's submission did not discharge the heavy burden to challenge a factual finding made by the primary judge. (b) Did the primary judge err in finding that Mr Boorer knew by 30 September 2004 that signed consents had not been obtained? (ground 3A) 59The primary judge said that Mr Boorer knew by 30 September 2004 that no signed consents had been lodged by Messrs Leonard and Brett King. That finding was based upon a misreading of two emails of that date, sent to Techontap's in-house accountant and copied to Mr Boorer. The emails dealt with the shareholders of Techontap. In its first few months of existence, Techontap had issued shares and there had been some transfers. The email attached a list of shareholders, stated that the last five issues of shares had not been advised to ASIC as signed forms had not been returned, and "Similarly, we have not been provided with the signed share certificates for these transfers, or the letters of consent". It is quite plain that the reference is to shareholder consents, not directors' consents. (The fact that Ms Von Lucken's affidavit made the same mistake, as to which she was not cross-examined, is neither here nor there.) Accordingly, her Honour erred at [38] and [39] when she said: "By email dated 30 September 2004, the defendant wrote to Mr Crewe-Brown requesting 'letters of consent'. I infer that the reference to such documents was a reference to the consent forms from Messrs King which were still outstanding. Mr Crewe-Brown forwarded the email to the plaintiff. In Mr Crewe-Brown's covering email to the plaintiff he added: 'Are you following up the matters relating to the signing of forms?' These documents establish that as at 30 September 2004, the plaintiff knew that no consent forms had been received by the defendant. There is no suggestion that the plaintiff himself had received signed consent forms from Messrs King, or indeed that such forms were ever signed. Accordingly, the plaintiff knew that, although they had earlier indicated that they would consent to becoming directors, they were not prepared to sign consent forms and therefore were not in fact willing to be directors of Techontap." 60It must be said that her Honour was led to that finding by the express submission of counsel appearing for HLB, which was not contradicted at the time by counsel appearing for Mr Boorer. 61However, although that matter was capable of influencing her Honour's assessment of credibility (for Mr Boorer claimed that he did not appreciate that the signed consents of Messrs Leonard and Brett King had not been provided), her Honour did not return to the matter when she came to address credibility. Instead, her Honour relied on other contradictions between Mr Boorer's evidence and the contemporaneous documents, the lack of internal consistency in Mr Boorer's evidence, his credibility in relation to peripheral matters (such as when Techontap's lease commenced) and his demeanour: at [93]-[101]. I would not regard her Honour's error in relation to the 30 September 2004 email as materially contributing to her Honour's assessment of credibility: see Riley v The Owners - Strata Plan 73817 [2012] NSWCA 410 at [52]. Ample support remains: see Xu v Jinhong Design and Constructions Pty Ltd [2011] NSWCA 277 at [63]. (c) Did the primary judge err in failing to accept Mr Leonard King's evidence that Ms Von Lucken admitted she had made an error in September and October 2005? (grounds 4 and 5) 62On the disputed conversations in September and October 2005, Mr Boorer was critical of her Honour's reasoning at [55] set out above. 63It was said in written and oral submissions that Mr King had not been challenged as to his recollection. That is not so: it was squarely put that Ms Von Lucken had not said that she had made a clerical error, but rather that she needed to look at the file because she had not seen that part of the file for over a year. Mr King's answer was "It may be. I don't think so". An email from Ms Von Lucken to Mr King of 13 October 2005 and an email on the same day from Mr King to Mr Boorer (in which Mr King said that he had not yet heard from Ms Von Lucken "as promised") tend to support Ms Von Lucken's evidence. Neither email contains any indication that Ms Von Lucken had admitted that she lodged the Form 484 with ASIC in error. 64There was more force in the criticism of her Honour's reasoning that Ms Von Lucken had no reason to admit she had made a mistake. It is perfectly clear that Ms Von Lucken had made a series of mistakes, in failing to advise Mr Boorer of the obligations to which he and his son and his company were subject. It was wrong for them to purport to appoint any director without first obtaining his written consent. It was wrong for the Form 484 to be lodged without consent having been provided. Far from being remarkable for Ms Von Lucken to have admitted that she had made an error, it would have been the truth. (To be sure, it appears as though the trial was run without reference to the basic provisions of the Corporations Act to which reference has been made above.) 65Even so, I do not think that Mr Boorer has surmounted the heavy onus he bears in displacing the primary judge's demeanour-based findings. (d) Did her Honour err in not finding that there was a breach of duty when the Form 484 was lodged in the knowledge that signed consents were not obtained? (ground 2) 66Her Honour concluded that there was no breach of duty in the circumstances of this case where Ms Von Lucken followed Mr Boorer's instructions. Even on the factual findings made by her Honour, I respectfully disagree with that conclusion. To my mind it is obvious that Ms Von Lucken was wrong - in the sense that there was a prima facie breach of federal law - to lodge the Form 484 knowing that written consents for two of the directors and the secretary had not been obtained. It was not seriously contended to the contrary. 67That conclusion does not of itself mean that there is a breach of the private law duty to take reasonable care she owed to Mr Boorer. It would be one thing if Mr Boorer well knew of the obligations and offences created by ss 201D, 204A, 204C and 205B. If Ms Von Lucken believed that he knew all of those things, and nevertheless instructed her to lodge a document which was false or misleading, then while she would still herself be in breach of the Corporations Act, she would not be liable to him for breach of a duty at common law. 68However, where as here it is plain that Mr Boorer was ignorant of the obligations imposed by the Corporations Act, I would not lightly accept that following his instructions discharged her duty. Plainly enough, one of the reasons Techontap was paying HLB thousands of dollars in fees was for her to take reasonable care to ensure compliance with the Act. 69What precisely was the duty was not explored in any detailed way in written or oral submissions in this Court. Competing expert evidence was given at trial. It was not resolved by her Honour, because of the narrower duty formulated by her Honour, and the factual finding that Mr Boorer had instructed Ms Von Lucken to lodge the form. While the precise content of the duty is an important question, it does not matter in this case because, even in the event of my finding it was breached, there was no loss. In the circumstances, it is neither necessary nor appropriate to say anything further about it. I do not consider that anything in Kuru requires any different course. (e) Remaining grounds of appeal 70Ground 6 asserts that her Honour erred "in not attributing to the respondent an independent statutory duty not to mislead and deceive ASIC under s 1308 of the Corporations Act". No submissions, in writing or orally, were made in support of it, and I take it to have been abandoned. 71Ground 6A was a challenge to her Honour's decision to permit a question to be asked of Ms Von Lucken in re-examination. On the face of the transcript, the witness had given inconsistent answers. Mr Boorer has not demonstrated that putting the question was outside the latitude afforded to the trial judge. In any event, Ms Von Lucken's answer makes no difference to any aspect of the appeal. 72Ground 7 asserted error in "not finding that the actions of the respondent were causative of loss and damage to the appellant". In circumstances where her Honour found no breach, and no loss, and where the appellant accepted there must be a retrial, it is not possible to take this ground any further. Orders 73I propose that the appeal be dismissed, with costs. 74SACKVILLE AJA: I agree with the orders proposed by Leeming JA and with his Honour's reasons. ********** DISCLAIMER - Every effort has been made to comply with suppression orders or statutory provisions prohibiting publication that may apply to this judgment or decision. The onus remains on any person using material in the judgment or decision to ensure that the intended use of that material does not breach any such order or provision. Further enquiries may be directed to the Registry of the Court or Tribunal in which it was generated. Decision last updated: 03 April 2014